Newell Co. Courts Big Brand Names

Ambition, Informal Style Mark Fast-growing Stanley Suitor

Fast-growing Newell Co. Court Manufacturers Of Big-name Brands

December 22, 1991|By W. JOSEPH CAMPBELL; Courant Staff Writer

BELOIT, Wis. — Amid the cornfields of Turtle Township, just east of Beloit, is the improbable command center of Newell Co., an ambitious, fast-growing company that seeks a merger with The Stanley Works.

Newell's executive offices are in a renovated, two-story farmhouse built in the mid-19th century. Company officials who work there are known to refer to it in mild jest as "the farm" or the place "in the sticks."

Having offices in a charming old farmhouse also suggests an unorthodox streak that has come to characterize the 90-year-old housewares and hardware firm that, officially, has headquarters in Freeport, Ill.

A dozen or so top Newell executives have had their offices at the farmhouse since the early 1980s, a period that has coincided with Newell's remarkable growth. The company's sales last year were $1.07 billion, compared with $138.5 million 10 years earlier.

Largely through acquisitions, Newell has grown from an obscure maker of brass curtain rods to the manufacturer and supplier of a range of brand-name consumer and industrial goods.

Wal-Mart Stores Inc., Kmart Corp. and Home Depot Inc. are among Newell's largest customers. As such retailers have become larger and more demanding, Newell has sought to keep pace, growing principally by acquiring other companies.

And that imperative largely explains Newell's interest in The Stanley Works -- an interest Stanley officials these days say is unrequited.

Mass retailers, Ferguson said in an interview late last week,

are becoming "bigger and more demanding, and there's closer working partnerships required all the way, and they need somebody with the resources to do that. And I think the guy that puts together powerful combinations, a la Newell and Stanley, is going to have a one-upmanship position in this equation."

Indeed, Stanley would offer Newell a range of leading hand-tool products, and a well-recognized brand name. Both are central to Newell's strategy.

Moreover, Stanley's distribution network overseas is enviable, Ferguson said. Newell has almost no presence beyond North America; about 15 percent of Stanley's sales are in Europe.

Ferguson, 64, the craggy-featured man who would put together Newell and Stanley, has been Newell's chief executive since 1966. He divides his time between homes in Naples, Fla., and Lake Geneva, Wis., a fashionable town 35 minutes from his company's executive offices.

"I'm more effective, I think, being gone from here than if I'm here," Ferguson said in the interview at the converted farmhouse. "You couldn't do that if you were the CEO only three or four years or something like that. But in my case -- because the impact I think is strong -- you can become a deterrent if you're too visible, I think.

"These guys do so much better without me being around. If I come around, things just kind of stop. So I'm better off and get the hell out of the way and let it move," he said. "I'm just lucky, in the sense that I'm able to back off from a lot of that minute decision-making." But more than anyone, Ferguson has shaped Newell's identity -- down to acquiring and setting up the command center at the farmhouse.

He is credited with developing the strategy of supplying the large nationwide retailers with a range of products. Newell also was among the first companies to make extensive use of a computer-based system by which retailers place orders and send other communications.

"Certainly one of the keys to us and what we've been able to develop is that every one of those product lines is No. 1 or No. 2. You can't carry a dog in this field," Ferguson said. "They only know you by the worst performer. ... So you can't afford to carry a non-performer. That was a lesson we learned early on." "But it's important to note," he said, "that we're not trying to be 50 product lines. We're not trying to be quantity in product lines. We'd rather have 10 product lines doing $100 million each than 50 product lines doing $20 million each. ... We're not interested in quantity of product lines and spreading ourselves all over the map."

"The whole thing is built on a solid base of performance. By performance I mean shipping goods and getting them on the counter and keeping the hooks full. That's the name of the game."

It may seem unglamorous, but the approach has been immensely profitable for Newell and its investors. Industry analysts who follow the company tend to be unstinting in their praise.